Brent crude oil futures rose to just under $50 a barrel on Friday as major producers agreed on a compromise to increase output slightly from January but continue the bulk of existing supply curbs to cope with coronavirus-hit demand.
Brent was up 53 cents at $49.24 a barrel by 1034 GMT after hitting its highest since early March at $49.92. West Texas Intermediate rose 47 cents to $46.11 a barrel. Both benchmarks are set for a fifth straight week of gains.
OPEC and Russia on Thursday agreed to ease deep oil output cuts from January by 500,000 barrels per day with further as yet undefined increases on a monthly basis, failing to reach a compromise on a broader policy for the rest of 2021.
OPEC+ had been expected to continue existing cuts until at least March, after backing down from plans to raise output by 2 million bpd.
The increase means the Organization of the Petroleum Exporting Countries (OPEC) and Russia, a group known as OPEC+, are set to reduce production by 7.2 million bpd, or 7% of global demand from January, compared with current cuts of 7.7 million bpd.
The deal will ensure declining crude inventories through the first quarter, said SEB analyst Bjarne Schieldrop.
“Oil demand is likely to rebound strongly in 2021 along with the roll-out of vaccines. There are good reasons to be bullish for oil,” he said.
But there was a risk that the new arrangement could lead to lax adherence to quotas given the gradual increases baked into it, said RBC’s Helima Croft.
Also supporting prices, a bipartisan $908 billion coronavirus aid plan gained momentum in the U.S. Congress on Thursday.
The premium of Brent crude futures for nearby delivery to future months is at its highest since February, a structure called backwardation, which usually points to supplies tightening up and suggests receding fears of a current glut.
Additional reporting by Aaron Sheldrick;Editing by Elaine Hardcastle